The next three years will be more decisive for the success of businesses than the last 50 years – speed becomes the most critical factor for success
30. June 2016
The next three years will be significantly more important and decisive for companies than the previous 50 years – this was the conclusion reached by a study that surveyed 1,500 CEOs. This striking conclusion shows the high level of importance that business leaders around the world are now attaching to digitization and the associated technological advances. The majority opinion is that the fourth industrial revolution will bring about significant changes to the economy. For a while now, digital transformation has no longer simply been a topic for the future. Instead, it is a challenge that must be tackled in the here and now – as quickly as possible. That said, few organizations have a clear idea about how it should happen.
What is motivating top-level managers? What are the opportunities and challenges that they envisage their companies and industries will face in the future? To find the answers to these questions, the auditing and consultancy company KPMG surveyed around 1,500 CEOs. The results of the survey were presented recently at the World Economic Forum (June 26–28, 2016) in Tianjin, China. The figures it provides are astonishing and are also expected to result in immediate shockwaves being felt by high-level executives everywhere. 71 percent of the CEOs think that the next three years will be more decisive for the future of their respective companies than the last 50 years. An additional 41 percent are confident that their respective companies will undergo a far-reaching reorientation process in the near future. While the global economy is generally viewed optimistically, digitization is the main topic that these CEOs perceive as presenting the biggest challenge.
Speed becomes the most critical factor for success
Industry 4.0, virtual reality and artificial intelligence are already transforming all kinds of sectors and business models. There is hardly an area of life or a sector of the economy that remains unaffected by digital technology. Nevertheless, many companies are exhibiting more of a wait-and-see attitude, as shown by the survey of Germany undertaken very recently by etventure, with the assistance of the market research institute GfK. In Germany, digitization is only at the top of the agenda for six percent of the companies surveyed. What’s more, its progress is further inhibited by the tendency to cling to existing structures, a lack of time and experience, and a lack of decisive action on the part of managers. This is going to become a problem for many companies. Instead of unfolding at snail’s pace, which has been the norm for previous industrial developments, digitization is taking place at breakneck speed. The CEOs surveyed in this research also agree that speed is the determining factor for the success of digital transformation. Philipp Depiereux, Founder & Managing Director of etventure comments on these figures: “Companies that want to remain economically relevant in tomorrow’s world are now being urged to implement the kind of measures that will allow them to determine their own course as much as possible. Companies that aren’t yet grappling with the digitization of their business models are leaving their fields of business wide open to competitors – young startups and large technology corporations from Silicon Valley.”
So what does that mean for business leaders? “Digital business models needs to be developed, tested and executed rapidly and with a clear focus on users,” Philipp Depiereux continues. “Within existing corporate structures, however, it is not possible to obtain this speed. What’s more, these environments rarely demonstrate the necessary mentality, which involves agile, innovative thinking and a culture of failure. For this reason, digital transformation needs to be driven forward within its own digital unit, a unit that is free from restrictive structures and processes.”
Yet it is only the CEO who can make revolutionary decisions like these. This may even make it necessary for business leaders to deal with topics that they themselves find unfamiliar and new. In this vein, 69 percent of the CEOs are working on the assumption that they will soon need to engage with topics that have not previously been part and parcel of their work.
Digitization requires the right staff
Another key finding from the survey of CEOs was that many companies do not have enough staff who are suitably qualified to address digitization. Although just 50 percent of the CEOs say that they are lacking expertise within their companies’ key functions, at the same time they say they do not know how to attract and retain young, talented employees. Philipp Depiereux comments: “Digitization calls for entrepreneurially-minded employees and management staff who have digital expertise and a startup mentality – people who work quickly and focus on finding solutions, who take on responsibility yet are able to work in a team. In order to recruit and retain employees like these, however, you need to be able to offer them a corresponding environment and an open company culture. For many companies, there is still a lot of work to be done in this area.”